Last week, President Obama announced plans for his administration to take historic steps to chart a new course in U.S.-Cuba diplomatic relations. Of the various components surrounding this ground-breaking policy approach, the President expressed a strong desire and willingness to increase travel, trade and information to Cuba by "chang[ing] course" and engaging in "an honest and serious debate" with members of Congress.
By normalizing relations with Cuba, the Obama administration will look to loosen the trade and travel embargo with Cuba that has been in effect for more than five decades. However, the initial steps to resume relations with Cuba are limited, in both travel and trade, and the reality of a Republican-controlled Congress will undoubtedly present serious challenges to changing the current system.
The Embargo
The main mechanism of enforcement of the U.S. embargo with Cuba is the Cuban Assets Control Regulations (CACR) enacted in 1963. The CACR is enforced by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury. CACR affects all U.S. citizens and legal permanent residents ("green card" holders) wherever they are located, all people and organizations physically located in the United States, and all branches and subsidiaries of U.S. organizations throughout the world. In 1996, Congress passed the Cuban Liberty and Democratic Solidarity (Libertad) Act (Helms-Burton Act), specifically requiring the President to instruct the Department of the Treasury and Attorney General to enforce the embargo with Cuba.
Under the CACR, travel to Cuba is restricted. Persons subject to U.S. jurisdiction must obtain a license to engage in any transactions involving travel to, from and within Cuba. Travel for purposes that fall outside of permissible categories (meaning family visits; official government travel; journalistic activities; professional research and professional meetings; educational activities; religious activities; public performances, clinics, workshops, athletic and other competitions, and exhibitions; support for the Cuban People; humanitarian projects, activities of private foundations or research or educational Institutes, exportation, importation, or transmission of information or informational materials) is not licensable. Even travel within the permissible categories cannot exceed the restrictions contained in the CACR.
At present, the only business travel and associated transactions that are licensable relate to commercial marketing, sales negotiation, accompanied delivery or servicing in Cuba of agricultural commodities, medicine, medical devices or telecommunications-related items. The travel restrictions include travel from or through third countries such as Mexico, Canada or Caribbean countries.
General and specific licenses are available to engage in certain transactions that are otherwise prohibited by the CACR. A "general license" authorizes a particular type of transaction without the need for an application to, or further permission from, OFAC. A "specific license" authorizes specific transactions and is issued to a specific person or persons, usually in response to an application. On a case-by-case basis, OFAC considers applications for specific licenses to authorize Cuba travel-related transactions not covered by a general license but consistent with one of the categories of specific licenses set out in the CACR. Unless authorized by a general or specific license, any person subject to U.S. jurisdiction who engages in any Cuba travel-related transaction violates the CACR and may be subject to penalties.
President's Proposal to Ease Travel Restrictions
Under the President's new plans to increase travel to Cuba, there will be an expansion of the current categories of general licenses to permit travel for export, import or transmission of information or informational materials, including publications, films, posters, phonograph records, photographs, microfilms, microfiche, tapes, compact disks, CD ROMs, artworks, news wire feeds and other information and informational articles. Travel that presently falls under the specific license categories will be licensable under the general license category, which means no prior OFAC approval will be required provided that the traveler complies with the strict parameters of the general license.
According to the White House Fact Sheet, U.S. companies will be able to send their employees to Cuba to provide business training for private Cuban businesses and provide other support for the growth of Cuba's private sector. Travelers in the general license categories of travel to Cuba authorized by law will be able to make arrangements through any service provider that complies with the CACR regulations governing travel services to Cuba, and general licenses will authorize provision of such services.
The President's announcement last week did not break any new ground for Cubans travelling to the United States. Under the terms of the U.S.-Cuba Migration Accord of 1994, the U.S. admits no less than 20,000 immigrants from Cuba annually, not including the immediate relatives of U.S. citizens. Although obtaining a non-immigrant visa continues to be a challenge for many Cubans, the Department of State, in August 2013, began issuing multiple-entry B-2 visas valid for five years to Cubans travelling to the U.S. for tourist purposes. The B-1 business visa, however, continues to be issued for single entry with a validity period of only six months. In addition, Cubans are still not eligible for H-1B "specialty occupation" visas or L-1 "intra-company transfer" visas.
Change Is Coming, But It Is Not Here Yet
The President's announced changes are not self-executing. They must be implemented through amendments to existing regulations. Until those amendments go into effect, the current embargo is still in effect. Under the Helms-Burton Act, in order for the embargo to be lifted, the President must first determine that a transition government in Cuba has come to power (meaning, among other things, that Cuba has a democratically-elected government that does not include a member of the Castro family), communicate that determination to Congress, and after consultation with Congress, take steps to suspend or lift the embargo.
Because a transition government in Cuba has not come to power, the President is not authorized to suspend or lift the embargo. Instead, he must work within the constraints of the CACR to loosen existing sanctions programs to ease travel restrictions. The President will take actions by amending existing regulations implemented by OFAC and the Bureau of Industry and Security of the U.S. Commerce Department.
Faegre Baker Daniels will continue to closely monitor amendments to the CACR and provide updates accordingly.
